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The Banking Corporations Sanctions Committee decides to impose a sanction of NIS 1.88 million on Bank Leumi LeIsrael Ltd. due to a contravention of directives based on the Prohibition of Money Laundering Law

 

The Banking Corporations Sanctions Committee (hereinafter “the Committee”) was established pursuant to the Prohibition of Money Laundering Law, 5760–2000 (“the Law).  As part of enforcement efforts in regard to the Prohibition of Money Laundering, the Committee is empowered to impose monetary sanctions on banking corporations (up to about NIS 2.26 million per contravention) in respect of contraventions of the Law, or Orders or Regulations issued based on the Law.

 

The Committee is chaired by the Supervisor of Banks, Yair Avidan.  Its members include Adv. Ilit Ostrovitch Levi, Director General of the Money Laundering and Terrorism Financing Prohibition Authority, and Oshrit Linn, Head of the Compliance Unit in the Banking Supervision Department.

 

The Committee has decided to impose a monetary sanction of NIS 1.88 million on Bank Leumi LeIsrael Ltd. (“the bank”) in connection with the bank’s activity in the “Pepper” digital application, in respect of two contraventions of directives based on the Law.

 

The contraventions are due to technological breakdowns, and involve not properly maintaining identification documents as required by the Money Laundering Prohibition (Obligations of Identification, Reporting, and Management of Banking Corporation Records to Prevent Money Laundering and Terrorism Financing) Order, 5761–2001 when opening accounts online.

 

As part of the decision, the Committee emphasized the following points:

  • The obligation to maintain identification documents is an essential element of the money laundering prohibition and terrorism financing prohibition (AML/CFT) regime. In accordance with the international standards set out by the FATF, documentation and maintenance of identification documents is not only meant for the purposes of the bank or the Banking Supervision department, but also—and mainly—for the purposes of the State’s enforcement agencies.
  • It is important to encourage and adopt innovation, while assimilating technological tools that will enable the opening of an account online. However, it is essential to maintain an effective control system over the application of new tools and processes.
  • The banking system invests resources and efforts in implementing obligations based on the AML/CFT regime. Alongside these investments and efforts, there is also the final result of fulfilling the obligations in the Order and in Supervisory Directives regarding the money laundering prohibition risk management.

 

It should be noted that the Committee made its decision following a hearing that was held for the bank, and that the Committee decided to lower the amount of the sanction relative to the maximum allowed amount set out in the Law since the bank discovered the contraventions on its own, reported them to the Banking Supervision Department, and acted to correct them.

 

The bank has the right to appeal the sanction to the Magistrate’s Court within 30 days.

 

The decision (in Hebrew) can be found here.